Silver’s Reset in Motion: COMEX Drawdown, Shanghai Refill, and Premiums Holding Above 12%
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Silver is moving through a clear reset phase where Western inventories continue to contract while Chinese vaults refill at one of the fastest paces in recent years. The shift is measurable across inventory data, positioning flows, and regional pricing.
On COMEX, inventories have fallen to their lowest level since December 2024, effectively erasing the entire accumulation built through 2025. At the same time, global inventory remains concentrated in Western vaults, with London and New York accounting for 96.7% of total global stocks, estimated at 38,554 metric tons.
In China, inventories are rebuilding rapidly. SHFE stocks increased by 75.2 tons (+10.9%), while SGE inventories rose by 71.2 tons (+15.9%). Combined vault stocks now stand at approximately 1,284 tons (41.3 million ounces), though this remains roughly 82% below the January 2021 peak.
Despite the increase in supply, pricing remains firm. Chinese silver closed the week at a premium of approximately 12.77% above LBMA benchmarks. At the same time, Exchange for Physical spreads between SGE spot and SHFE futures have compressed to approximately CNY 30/kg, or $0.137 per ounce, indicating convergence between spot and futures pricing.
Positioning data shows renewed participation. Managed money increased net long exposure by 19.6%, driven by a 9% increase in gross longs and an 11.5% reduction in shorts. Swap dealers also reduced net short exposure, indicating a shift in positioning across participants.
These figures describe a market where physical supply is being redistributed, inventories are rebuilding in the East, and participation is increasing from historically low levels.
COMEX silver inventories have declined to their lowest level since December 2024. The reduction effectively removes the accumulation that occurred throughout 2025.
Weekly data shows a further decline of approximately 19.4 tons, confirming that the downward trend remains intact. The continued reduction in COMEX stocks indicates that physical metal is leaving Western vault systems even as global prices stabilize.
Total global silver inventory is estimated at approximately 38,554 metric tons. Of this, approximately 96.7% is held in Western vault systems, primarily in London and New York.
This concentration highlights the importance of Western storage hubs in determining global supply availability. Movements within these vault systems therefore have a disproportionate impact on global inventory dynamics.
In contrast to COMEX, Chinese vault inventories have increased significantly. SHFE stocks rose by 75.2 tons (+10.9%), while SGE inventories increased by 71.2 tons (+15.9%).
Combined inventories across SHFE and SGE now total approximately 1,284 tons, equivalent to roughly 41.3 million ounces. Over a five-week period, SHFE alone has recorded cumulative inflows of approximately 393 tons, placing the pace of restocking in the 96.75th percentile relative to recent history.
The latest inflow of 26.7 tons confirms that the trend remains active. Despite these increases, total inventory levels remain significantly below historical peaks, with current stocks approximately 82% lower than the levels recorded in January 2021.
Silver pricing in China continues to trade at a significant premium relative to LBMA benchmarks. The latest data shows a premium of approximately 12.77%.
This premium persists despite the rapid increase in local inventories, indicating that demand continues to absorb incoming supply. The consistency of the premium across sessions suggests that pricing remains supported by domestic market conditions.
Despite a year-to-date price increase of approximately 5.34%, major silver ETF holdings in London continue to decline.
BlackRock’s SSLN has recorded a 26.89% reduction in holdings year-to-date. SLV holdings in New York have declined by 12.35%, while London-based SLV holdings have fallen by 7.66%.
Approximately 74% of London silver stocks remain tied to ETFs, meaning that changes in ETF flows have a direct impact on available physical supply within the vault system.
The spread between SGE spot pricing and SHFE futures has narrowed significantly. The SGE Ag(T+D) price stands at CNY 18,069/kg, while the SHFE front-month contract trades at CNY 18,099/kg, equivalent to approximately $82.4 per ounce.
The resulting spread of CNY 30/kg, or $0.137 per ounce, indicates a near-parity relationship between spot and futures pricing. This compression reflects a convergence of near-term and forward expectations within the Chinese market.
Commitment of Traders data shows a significant increase in speculative participation. Managed money increased net long exposure by 19.6%, driven by both an increase in long positions and a reduction in short exposure.
Gross long positions increased by approximately 9%, while gross shorts declined by 11.5%. Swap dealers also reduced net short exposure, indicating a shift in positioning across commercial participants.
The increase in net long exposure reflects a re-entry of speculative capital into the market following a period of reduced participation.
The interaction between inventory flows and pricing provides a measurable view of market balance. While Shanghai inventories have increased by over 140 tons in a week and nearly 400 tons over five weeks, premiums remain above 12%.
At the same time, COMEX inventories continue to decline, and ETF holdings in London are being reduced. The combination indicates that physical metal is being redistributed rather than accumulating globally.
For bullion dealers, the current structure reflects a redistribution phase rather than a surplus environment. With COMEX inventories declining to multi-month lows and Shanghai inventories increasing rapidly, supply is shifting geographically. The persistence of premiums above 12% indicates that demand remains strong enough to absorb these flows.
For conservative investors, the combination of rising Chinese inventories and declining ETF holdings provides a measurable signal of changing demand patterns. While Western investment flows have reduced exposure, Chinese markets continue to accumulate physical metal, indicating a shift in ownership rather than a reduction in demand.
For traders, the current setup defines both near-term consolidation and longer-term directional potential. In the near term, prices are likely to remain within a defined range, with $78 to $85 per ounce acting as a working band based on current spot and futures pricing. The compression of spreads and rebuilding of inventories suggest that volatility may moderate as the market stabilizes.
Over the longer term, the combination of rising speculative participation, persistent premiums, and ongoing inventory redistribution indicates that upward pressure remains embedded. If COMEX inventories continue to decline while Chinese demand maintains premiums above 10%, price levels above $90 per ounce become increasingly plausible. Conversely, a sustained increase in global inventories combined with ETF inflows would indicate a more balanced market and limit upside expansion.
Across inventories, positioning, and regional pricing, the data describes a silver market transitioning from depletion to redistribution, with demand remaining sufficient to sustain elevated price levels.
Hugo Pascal’s observation about the AU9999 contract hitting a 10-week volume high underscores the increasing significance of physical gold trading on the Shanghai Gold Exchange. This trend not only highlights robust domestic demand in China but also reflects broader shifts in the global gold market toward physical-backed assets.
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